20% water rate rise leaves gap in Saugus

SAUGUS -- The Water Department is awash in debt, and a 20 percent rate increase passed by Saugus Town Meeting won't be enough to cover operating costs in the next fiscal year, Town Manager Andrew Bisignani said.

''The water fund is not meeting its expenses," Bisignani said Tuesday. ''It's designed to recover the full cost of the system, but it's not. . . . And what this [20 percent] rate increase will do, is force us to make cuts" elsewhere in the fiscal 2005 budget.

Town Meeting approved the new rate Monday, by a vote of 23-22. Bisignani proposed a 39 percent water rate increase for fiscal 2005. The Finance Committee recommended a 30 percent increase. But Town Meeting instead approved an amendment by Peter Manoogian, a Town Meeting member and former elected official.

Manoogian limited the water rate increase to $477,590, or enough to cover a 26.7 increase in water charges to Saugus from the Massachusetts Water Resources Authority, the town's water supplier.

Saugus ratepayers will pay a flat rate of $67.50 for the first 3,000 cubic feet of water used. After that, increases will be charged in equal percentage to reach the $477,590 amount, according to the amendment. The town currently charges $53.28 for the first 3,000 cubic feet of water used.

Manoogian's amendment translates to a 20 percent increase for ratepayers. He said he offered it to give people a break, and to send a message to town officials that they must come up with a plan to fix the town's aging water system.

''With a lack of a capital plan, " said Manoogian, a former selectman and Finance Committee chairman. ''We're just going to get hit every single year with a rate increase. . . . If you give them what they want, their will be no incentive for them to do better."

Manoogian said he is concerned because the town's rate of unaccounted-for water use is 30 percent, almost twice as much as those in other MWRA communities. ''Thirty percent of our water is being lost somewhere," Manoogian said. ''How can we justify paying for something that we are not using?"

The MWRA recently revised its most recent estimate on water loss in Saugus. In a June 16 letter to Bisignani, the MWRA said Saugus ''does not have a 400,000 gallon per day leak," that is going undetected. The letter, signed by David Liston, program manager for water accountablility, urges Saugus to continue an aggressive leak detection program.

According to Public Works director Joseph Attubato, the town currently has Heath Consultants Inc. scouring the town looking for leaks.

''I knew we never had that kind of leak and this proves it," Attubato said. ''We are doing the best we can with the resources we have."

Bisignani said he was skeptical about the 400,000 gallon estimate. ''It was a mistake . . . an educated guess on their part. The chances are, if there ever was a leak, it has been repaired."

Water leaks, broken water pipes, and faulty meters are taxing Saugus, Bisignani said. That's the primary reason for a 30 percent gap in the amount of water the town is being billed for by the MWRA and the amount charged to ratepayers, he said.

To close the gap, Bisignani proposed raising water rates 39 percent. At that rate, Saugus households on average would have paid $77 more for water next year. The increase would have been enough to cover the MWRA increase, and make the water enterprise fund self-sustaining, he said.

''The 39 percent [increase] is what the town needs to break even. . . . The MWRA increase was dramatic, but the bottom line is, we still have to pay them, and maintain the water system."

The Water Resources Authority assessed the town $2.2 million for water in fiscal year 2005, which starts July 1. The town paid $1.7 million to the MWRA this year

The 20 percent increase will create a $500,000 deficit in the water enterprise fund, Bisignani said. To make up the difference, he'll have to make cuts elsewhere in the $53.4 million fiscal 2005 budget, which will be presented at the June 28 Town Meeting.

Bisignani isn't sure where the cuts will be made. An override approved last month earmarked money for the schools, library, and Fire Department, among other town departments. ''I don't know where the cuts will come from," he said.

Kathy McCabe can be reached at kmccabe@globe.com.